Seize the Moment on Holistic Advice

As appeared in Barron’s.

I recently did an internet search for the “evolution of advice.”  The results were telling.  Most of them related to technological advances and the growing use of financial technology, now ubiquitously known as “fintech”.  Some related to “robo-advisors”, and a few others related to the shift from investment-focused models to wealth-management models that fully incorporate financial-planning components.

I wasn’t surprised, though I must admit some disappointment.  Don’t get me wrong.  You won’t find a stronger advocate for deploying fintech to make financial advice more efficient, effective, and universally available.  And I do believe that robo-advisors have a role to play in serving certain client segments.  As for the industry’s continued shift toward client-centric wealth-management advice and away from the investment-only models of the past, I think the shift can’t be completed quickly enough.

Yet, at least according to Merriam-Webster, “evolution” is a cumulative change in a population through time leading to the appearance of new forms.  I guess that does cover the inception of robo-advisors several years ago and the advent of wealth managers a few decades ago.  But do people really think that the current “evolution of advice” comes down to advisors doing a better job embracing new technologies?  Sure, we must all do so, but simply committing ourselves to using more and better technology isn’t committing ourselves to meaningful, evolutionary changes.  In fact, it may merely be masking the need for such changes.

Today’s consumers of advice want much more, and their trusted advisors are well-positioned to meet the demand.  Discerning consumers will always seek and expect exceptional financial advice.

But growing numbers of surveys, studies, and experiences show that they now also seek fulfillment, peace of mind, purpose, enjoyment, meaningful experiences, and even the ability to build their own legacies.  They want financial security and strength, but they also want better, fuller lives for themselves and their loved ones.  In short, they want financial enrichment, but they also want life enrichment.

The current “evolution of advice” must start with an understanding and full embrace of evolving consumer preferences.  Those who are willing to accept this truth will seek out ways to provide additional services that, until recently, they saw no need to provide.  Every advisor should be communicating with clients directly, through surveys, and otherwise to ask them what they really want – and without limiting them to the menu of services the advisor can currently offer.  When they do, they’re likely to learn that clients increasingly want wellness services like concierge medicine, dependent care services, fitness consulting, nutritional programs, and even mindfulness coaching.  They may realize that there is unprecedented demand for technological peace of mind through cybersecurity services; or that people want personalized support for their career and educational pursuits.  They are likely to hear about interest in lifestyle-enhancement services like travel-concierge programs and will almost certainly hear about needing help with philanthropic, community, and other legacy-building efforts.

Some advisors are already polling their clients and directly offering one or more specifically requested life-enrichment services.  But there are easier and more focused ways to adapt to the changing environment.  Some advisors are beginning to partner with others to provide these new services – much the way advisors already partner with legal, accounting, insurance, and other professionals today.  Certainly, with all the external resources available today, there is no need for an advisor to try to build any of these new service offerings themselves.  Indeed, there is wisdom behind the idea that most financial advisors should remain focused on what they do best—providing financial advice—while partnering with others to provide the expertise they do not currently possess.

Of course, it’s not quite that simple.  Engaging third parties to provide services to clients requires a substantial commitment to vetting, negotiating with, and performing diligence on these service providers.  Yet, the rewards could be dramatic, not only because partnering with others is an efficient way to deliver new and differentiated services to clients but also because the process of building these partnerships will likely expand the traditional center-of-influence, or “COI”, networks that successful advisors often use to generate new-client referrals.

Either way, the overused cliché “holistic advice” will soon no longer be used to describe holistic financial advice and will instead become associated with truly holistic advice.  And as for those advisors who prefer to cling to the limiting constraints of the past, their failure to evolve with their clients’ needs may very well lead to what Darwin might have called “natural selection for extinction.”

Imagine an advisor that can offer deep financial planning and investment management services and also offer access to a full suite of differentiated life-enrichment services.  That’s the future of holistic advice, and the future is now.